Carrier seeks to breathe new life into U.S. coastal shipping

Several weeks after this article was written, American Feeder Lines announced that it would suspend service and planned to shut down the company following unsuccessful talks with investors.

Rudiger (Rudy) Mack, chief operating officer of American Feeder Lines (AFL), must be an optimist. Mack, who was president and CEO of Hapag-Lloyd (America) Inc. from 1999 to 2007, is trying to make a go of a transportation niche that has never gained critical mass in this country: coastal container shipping, also known as short-sea shipping. He spoke about his company's plans and ambitions at the recent Coalition of New England Companies for Trade (CONECT) Northeast Trade & Transportation Conference in Newport, R.I.

According to AFL's website, the company's mission is to "Build, own, and operate the first fully compliant Jones Act short sea/feedering container liner service in the United States." And therein lies the challenge. Short-sea container shipping has been quite successful in Europe, which pioneered the concept, as well as in Asia and South America. But it hasn't fared as well in the United States, where the Jones Act requires all ships engaged in cabotage—carrying cargo between U.S. ports—to be U.S.-built, flagged, crewed, and managed. That restriction makes short-sea shipping in the United States costly to operate and limits flexibility.

Still, AFL sees a future as a U.S.-flag carrier. Currently, it runs a 700-TEU containership between New York, Boston, Portland, Me., and Halifax, N.S. That lane parallels the heavily traveled I-95 corridor, and Mack believes concerns about road congestion and the environment as well as AFL's fixed-day schedule will make short-sea shipping attractive to ocean carriers, importers, and exporters.

"Transit time is really only important for the first container. After that, it's the frequency, reliability, and predictability that count," he said. But it's hard to wean potential customers away from trucks, not to mention gain their confidence after previous feeder services failed, Mack admitted.

The arrival of giant containerships at a handful of U.S. ports after the Panama Canal's expansion is expected to create more demand for coastal feeder services along the East and Gulf coasts. That may be AFL's best opportunity to grow, but it's uncertain how soon it will be able to add capacity. According to Mack, the company has been lobbying in Washington&mash;unsuccessfully, so far—for a temporary waiver that would allow it to put foreign-built ships with U.S. crews on additional routes until it can finance construction of U.S.-built ships and get them into service.